Brussels (The Brussels Morning Newspaper): The banks in Belgium were denounced for offering poor savings interest rates. As a result of the introduction of high yielding state bonds banks had to raise their rates causing depositors to move their funds from savings accounts into these instruments. Experts propose that a single savings rate should replace the loyalty rate system.
For this the belgian banks took much criticism. In September 2023 Finance Minister Vincent van Peteghem brought out a one-year State Bonds that offered returns much higher than savings accounts prompting the banks to raise their rates in order to match them. People began to take cash out of savings accounts and put it in these bonds.
Why are Belgian savings rates lower than other eurozone countries?
Belgian banks didnt increase their savings rates as much as experts thought they should. A study by IESEG School of Management found that savings rates in Belgium are lower than in many other eurozone countries. In June banks in Belgium were only offering an average rate of 0.96% on savings deposits which is less than what most other eurozone countries provide. In Luxembourg folks earn around 3.44% interest on their savings while in France it’s about 2.55% because the government sets the rates. Among Belgium’s neighbors only Germany has a lower rate at 0.76%.
The loyalty rate which you get only if you keep your money in the bank for at least a year makes people hesitant to switch banks because they might lose some of their returns. This also makes it tough to compare different offers. Experts suggest replacing this system with a single savings rate to make things simpler for savers. Fixed term accounts offer higher interest rates than regular savings accounts. In June Belgian banks provided 3.27% interest on new fixed term deposits up to one year which was more than what the Netherlands 2.81% Germany 3.11% and Luxembourg 3.24% offered. Raising rates on regulated savings accounts is costly because it affects the total amount of money involved.
